Remarks From Remarksman

September 21, 2008

Guest Posting – Re: Shill, baby, shill

Filed under: Uncategorized — BrianB @ 6:13 am
Tags: , ,

My most loyal reader was inspired by my Shill, baby, shill post to do a bunch of research on oil drilling, and sent me this information. I had wondered in the post how much the graph in that post would change if ANWR and other areas around Alaska that oil companies want to drill were included. The answer to the question and citations are below.

As you will see, ANWR and other Alaskan areas hold more promise of oil than the outer continental shelf of the lower 48, but adding them in still only gives an eventual production increase of less than 10 percent of consumption. Unfortunately, this is probably posted too late to convince congress not to open everything the oil companies ask for.

Here are a thousand words, more or less, on the same topic with a little info on ANWR.

U.S. crude oil imports in 2007 were 10.03 million barrels/day from all countries, about 1/2 (5.39) from OPEC. A substantial amount comes from the Persian Gulf (not exactly a stable source) – 2.12 million barrels/day, and from Canada and Mexico combined – 3.30 million barrels/day. (We want (need?) Mexican oil, just not their workers, documented or not. This comment is not a part of the following citation!).

U.S. Crude Oil Field Production in 2007 was 5.06 million barrels/day (lower 48 and Alaska). Production peaked at 9.24 million barrels/day in 1960.

*Not sure of differences between US Oil “Consumption” and “production and imports”. The numbers above seem to agree closely to those on the chart on your blog yesterday.

For ANWR, a recent assessment by the Energy Information Administration (EIA) reports the mean of various development scenarios as peaking at 1.0 to 1.35 million barrels/day.

So between new offshore drilling and ANWR there might be 1.2 to 1.5 million barrels/day gained — way in the future.

OPEC just announced a production cut of 520,000 barrels/day (out of a total of 28.8 million barrels/day . That looks like 2 1/2 times the eventual projected production from proposed U.S. offshore drilling (if I’m reading the numbers and doing the math right). It looks like OPEC can wipe out gains from “Drill Baby Drill” and ANWR in the blink of an eye (although OPEC cuts don’t necessarily translate to a proportional cut in U.S. imports, they do impact prices). As long as we import a significant fraction of the oil we use, OPEC will remain the thousand pound gorilla in the room. In the past, OPEC has fiddled with quotas using much larger cuts than this latest one to control prices; between Sept 1, 2001 and January 2002 OPEC reduced quotas by 5 million barrels per day, and Russia joined the fray by promising cuts of an additional 462,000 barrels. Oil is a global commodity, and if OPEC cuts production to raise or stabilize prices the dinky contribution of new U.S. offshore drilling is going to have little impact on oil prices (assuming the current panic in many quarters is over the price rather than sustainability).

Palin has a big stake in expanded drilling in Alaska (ANWR). A 2004 EIA study reported by AP noted the importance of the refuge’s oil to Alaska. “Without the refuge’s development, oil flowing from the North Slope would fall to 500,000 barrels a day – half of current levels – by 2025 and approach levels at which the pipeline may no longer be economical to operate, the report said.”


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